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American Apparel hires outside investigators

In the week since American Apparel moved to fire CEO Dov Charney over misconduct, new facts have surfaced that led the company to hire a consulting firm to do a forensic investigation, says co-chairman Allan

In the week since American Apparel moved to fire CEO Dov Charney over misconduct, new facts have surfaced and the company has hired an outside consulting firm to launch a broadened investigation related to Charney's behavior, says newly appointed Co-chairman Allan Mayer.

"We expect, unfortunately, that there's a lot more to be uncovered, and it will be uncovered in the coming weeks," Mayer says. "This is not a fishing expedition. We're only going looking into things that are quite specific that have popped up. There are a number of very troubling things that we're finding."

Mayer says the new facts are a result of more people coming forward since Charney's firing and aren't related to sexual harassment allegations, which Charney has been the target of several times during his tenure as CEO of American Apparel.

American Apparel hired FTI Consulting to head the investigation.

The board fired Charney unanimously Wednesday, pending a 30-day cure period required by Charney's contract. In a statement from the company, it said the decision was made during an "ongoing investigation into alleged misconduct."

In Charney's termination letter, published by BuzzFeed and which Mayer confirms is authentic, the board outlines his behavior, including refusing to take part in sexual harassment training, failing to stop a direct report from making a fake blog that featured naked photos of a former employee who is suing him, making derogatory remarks to employees, giving employees raises or bonuses in exchange for signing release agreements regarding his conduct toward them, and using company funds to pay for personal expenses.

The board also says that the company has had difficulty raising money and attracting investors because of Charney's behavior.

And Mayer says those allegations are just a few examples. The misconduct listed in the termination letter is "not the entirety by any means of what we discovered," he says.

Amid the corporate controversy, American Apparel shares dropped more than 21% in Tuesday trading, closing at under 53 cents a share.

Charney has made it clear he's going to put up a fight. An SEC filing by Charney on Monday states that he "believes that such termination is without merit and intends to contest it vigorously." And in a letter to the board's counsel last week, Charney's attorney, Patricia Glaser, calls the board's claims "baseless."

Glaser also demanded a meeting with the board, to take place no later than Monday, to "negotiate a process whereby Mr. Charney will be fully reinstated to his positions within the Company..."

Mayer says a meeting hasn't taken place, and he sees "no reason" to schedule one.

Glaser has not returned requests for comment.

While Charney has been the subject of rumors and allegations related to his behavior at work for years, including walking around his Los Angeles office in his underwear and demanding that store employees look and dress a certain way, Mayer says the board didn't have substantiated facts to act on until recently. The company launched an internal investigation into Charney's conduct in March.

"We're obviously very confident that we have more than enough hard evidence to make our case if we're forced to in court," Mayer says. "I don't think we would have been in that position several years ago."